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Generate an annual ebit

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Hicks Health Clubs, Inc., expects to generate an annual EBIT of $502,000 and needs to obtain financing for $1,090,000 of assets. Its tax bracket is 30%. If the firm uses short-term debt, its rate will be 7.0%, and if it uses long-term debt, its rate will be 8.0%. By how much will their earnings after taxes change if they choose the more aggressive financing plan instead of the more conservative plan?

Reference no: EM133119521

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Generate an annual ebit : Hicks Health Clubs, Inc., expects to generate an annual EBIT of $502,000 and needs to obtain financing for $1,090,000 of assets. Its tax bracket is 30%. If the
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